March 11, 2025
Agenda Item No. 10
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
Jason Al-Imam, Finance Director/Treasurer - 949-644-3126, [email protected] PREPARED BY:
Katie Vu, Management Analyst - 949-644-3143,
[email protected]
TITLE:
Amendment No. One to Purchase and License Agreement with T2 Systems Canada, Inc. for Multi-Space Pay Stations
ABSTRACT:
The City of Newport Beach currently operates approximately 144 pay stations, with each unit having a typical life span of around 10 years. In 2021, the City purchased 58 new pay stations to replace outdated single-space meters. The new pay stations are operational and fully compatible with the City’s systems. However, in the coming years, several pay stations purchased between 2014 and 2018 will reach the end of their life span and require replacement. To address this, staff is planning a phased replacement of these aging units over the next five years. To ensure the continued reliability and efficiency of the City's parking system, staff is requesting City Council approval to amend the existing agreement with T2 Systems, Inc. (T2) to purchase, install and maintain approximately 86 additional pay stations, ensuring uninterrupted service and continued compliance with the City’s operational standards and state regulations, and to support the long-term sustainability of the City’s parking infrastructure.
RECOMMENDATIONS:
Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 1578) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because this project has no potential to have a significant effect on the environment; Authorize staff to purchase and replace the outdated pay stations over the next five years, ensuring all units are replaced by the end of their 10-year lifespan, while maintaining compliance with the City's Local Coastal Program Implementation Plan and the California Vehicle Code; Authorize the City Manager or designee to enter into an amendment to the existing agreement to purchase, install and maintain up to 86 additional multi-space pay stations, replacing those purchased between 2014 and 2018 as they reach the end of their 10-year lifespan in the coming years, with an amount not-to-exceed $785,122.04; and Waive the standard bidding requirements provided by City Council Policy F-14 and approve a single source award of the agreement to T2 Systems, Inc. (T2).
DISCUSSION:
Background
The City manages approximately 4,100 on-street and off-street pay parking spaces, including those in the Balboa Pier and Corona del Mar parking lots. To facilitate parking payments, the City operates around 144 multi-space pay stations, which are integral to the City’s parking management system. These pay stations contribute significantly to the City’s parking revenue, generating over 57% of the total income, which amounted to approximately $7.63 million in Fiscal Year 2023-2024. Overall, parking revenue typically ranges from $12 million to $15 million annually, with pay stations playing a key role in securing this vital income.
In 2021, the City purchased 58 new pay stations to replace outdated single-space meters, which are fully compatible with the City's existing systems. However, several pay stations purchased prior to that, between 2014 and 2018, are nearing the end of their typical 10-year lifespan and will require replacement in the coming years. The aging pay stations are becoming increasingly difficult to maintain. With poor connections and ongoing technical issues, these units are creating challenges for both visitors and staff, making it harder for customers to complete transactions. This deterioration raises concerns about potential revenue loss if the pay stations continue to malfunction.
Therefore, upgrading to newer, more reliable units will help the City reduce ongoing maintenance costs and minimize operational disruptions. The improved functionality of modern pay stations also leads to faster and more efficient transactions, which can reduce customer frustrations and complaints. Additionally, replacing these outdated units is a cost-effective approach, as the new pay stations continue to generate significant annual revenue. Considering the cost to replace, as previously mentioned, the return on investment for replacing aging pay stations is highly favorable. With a typical 10-year lifespan for each new unit, these pay stations will provide a strong and sustained return on investment for the City over the long term.
Ensuring the reliability of these units is crucial for the effective functioning of the parking system, supporting smooth operations and maintaining a consistent revenue stream for parking services.
Physical Payment Options Still Required
The City currently operates approximately 144 pay stations, with one pay station for every 10-20 parking spaces. Even with the rise in mobile payment use, maintaining physical pay stations is crucial to ensure full access and compliance with the California Vehicle Code. For visitors who may not have access to mobile payment options or prefer not to use them, it is essential that physical pay stations remain available within a reasonable distance.
It is therefore necessary to preserve the pay stations in their current locations to continue providing equitable access for all users while remaining compliant with legal requirements. By maintaining these stations, the City upholds its commitment to accessibility, convenience and legal compliance for both residents and visitors, while safeguarding a reliable revenue stream for parking operations.
Single Source Award of Contract
The City uses T2 pay stations, and customers are already familiar with the T2 interface, reducing any disruptions to the user experience. Additionally, T2 pay stations utilize standardized replacement parts, which improve stocking efficiencies and simplify ongoing maintenance. The back-end data from T2 pay stations is accessible and easily reconciled, further enhancing operational efficiency.
Purchasing pay stations from a different vendor would complicate daily, monthly and yearly reconciliations by requiring data to be pulled from multiple sources. It would also incur additional costs associated with integrating two different software systems. Furthermore, the potential for delays in data flow between multiple pay station types and enforcement software could reduce enforcement efficiencies.
City Council Policy F-14 allows for the request of sole and single source awards in certain cases when competitive bidding is either impractical or impossible. Council's approval of a single source award to T2 is recommended for the aforementioned reasons.
Equipment Costs
To replace the aging pay stations purchased between 2014 and 2018, the City plans to purchase up to 86 new units over the next five years. The total cost for these replacements is $785,122.04, which includes essential components such as EMV (credit card chip) readers, vault locks, coin canisters, bill note stackers, wireless telecommunication SIM cards, and various other hardware items.
The following outlines the anticipated pay station replacements over the next five years, subject to ongoing assessments of their condition:
Year of Purchase
# of Pay Stations
Amount
2025
31 (2014 replacements)
$283,251.73
2026
16 (2015 replacements)
$146,696.51
2027
32 (2016 replacements)
$293,264.13
2028
5 (2017 replacements)
$ 45,775.75
2029
2 (2018 replacements)
$ 16,133.92
Total
$785,122.04
FISCAL IMPACT:
Funds are set aside annually to manage the perpetual replacement of parking equipment in an equipment internal service fund, which has accumulated roughly $2.94 million for this purpose. The amendment contract authorization of $785,122.04 will be paid from the Parking Equipment Fund (75504-911015), which has an available budget of $400,000 in the current fiscal year, which is sufficient to cover the first year of expenses, therefore no budget amendment is required. Future year adopted budgets will include the appropriation for this item. Staff estimates that combined parking revenues over the next 10 years will exceed $120 million, not including parking citations.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A – Amendment No. One to Purchase and License Agreement with T2 Systems Canada, Inc. for Multi-Space Pay Stations
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Amendment No. One to Purchase and License Agreement with T2 Systems Canada, Inc. for Multi-Space Pay Stations
March 11, 2025
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